Findings from AI-powered tax-filing product april’s 2023 customer impact study suggest customers are receptive to a self-guided, mobile-first process. Among the benefits are substantial time savings, convenience, and maximized refunds.
april partners with banks, fintechs and payroll providers to help taxpayers file, estimate and optimize their taxes within existing financial apps. One of the most unique fintechs today, april’s tax solutions are designed to be white-labelled and seamlessly integrated. A notable investor roster backs the company, including Treasury, QED, Nyca Partners, Team8, Euclidean Capital, and Atento Capital.
Clients gain year-round tax insights and optimization opportunities, preventing tax season shocks while accelerating the filing process. They report increased product engagement, monthly active users (MAU), and deposit growth, with up to 99% of users depositing their tax refunds into partner accounts.
What april looked for in partners
In preparation for filing season, april partnered with more than 20 financial services, fintech, and payroll companies, including Gusto, Dayforce Wallet, Rain, and Zenledger, to make its services available to more customers.
Co-founder and CEO Ben Borodach said april looks for three key elements from partners seeking embedded tax services, beginning with brand trust and affinity.
“We specifically seek out partners who have developed innovative, category-defining products,” Borodach said. “Being leaders in their fields, they enjoy strong brand and product affinity, which is crucial for our collaborative efforts.”
Data-in capabilities are crucial to the embedded model, with its success often hinging on utilizing existing customer data to expedite the filing process.
“Our most successful partnerships, particularly in the payroll sector, leverage extensive income data that can be directly imported to significantly ease the burden of manually entering information into each form field,” Borodach explained.
Strong marketing and product communication are the final pieces. It is essential to send timely reminders and critical updates. Taxpayers need access to important information at every step.
The results are in: Speed and (low) cost certainty
Close to half, 47%, of taxpayers completed their returns in under one hour, with the average return taking 43 minutes. According to april, the IRS reported an average of 13 hours to complete taxes.
The process is not only faster but cheaper. april worked with partners to commit to a flat fee or 100% free filing structure; 95% filed for free.
Borodach said the unique pricing structure responds to frequent complaints about other solutions’ complex and obfuscated pricing models and constant upsells. Often, taxpayers don’t know how much they will have to spend on filing until they’re already deep in the process of filing within the product.
“We simply built the product so there was no opportunity for dynamic pricing based on your tax situation and made all partners commit to a simple, upfront pricing model (free or $X flat fee to file),” he explained. “We get paid a flat fee per file from our partners – no revenue implications exist in not offering a more complex user-facing pricing model.”
And a responsive bot
Virtually all, 98%, filed via their mobiles, and 51% of enquiries were resolved by a specially-trained AI chatbot. Its success is based on taxpayer enquiries from previous years, recent tax code changes, and help center articles. When required, april crafted concise content snippets that answered specific enquiries.
“The real difference we saw in efficacy against the big players was limiting the source content from which the bot could pull answers,” Borodach said. “Other companies put a layer of AI on top of a vast amount of forum data, which increased the likelihood of the bot to return an irrelevant or incorrect answer. Our help center articles were expert-written, so there was a smaller margin of error in producing accurate and relevant results.”
april attracted tax rookies and product switchers
The service clearly struck a chord with customers: 27% of april’s customers reported this was their first time filing, while 34% reported switching from TurboTax.
Borodach believes the notable number of first-time filers was due to the ability to import data from partners, significantly sped up the filing process. Partners’ established trust with their user bases also helped.
Honesty and convenience convinced many to switch. Data was easily imported, and irrelevant questions were skipped. Borodach said many filers are frustrated with the bait-and-switch tactics used by other options that attract users with a “start for fee” option before adding fees throughout.
“In contrast, april’s transparent, flat-fee or free pricing model, along with the convenience of filing through an app they already use, made the choice clear,” Borodach concluded. “The ability to file with pre-filled forms not only saved time but also convinced many to abandon their previous filing methods.
“Additionally, many who had previously relied on CPAs chose to file independently with april for the first time, frequently citing the ease of the experience in their positive reviews.”
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